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Commercial Law in the Cracks of Judicial Federalism

Almost seventy years after the Supreme Court sought to rationalize the American system of judicial federalism in Erie, sales law remains trapped in a pattern more reminiscent of the Swift v. Tyson era. The extraordinarily wide separation of powers in the NCCUSL-ALI uniform law-making process has entrenched Article 2 of the UCC in the status quo. Concurrently, an imbalance between the federal and state courts in the American system of judicial federalism has conferred an unusually wide range of discretion over state commercial law on the federal courts. Ironically, therefore, state sales statutes are being reinterpreted and revised by the federal courts rather than the state legislatures or state courts. The federal courts are thus the most important source of innovation and experimentation in modern American sales law, but the role they play is not entirely consistent with modern notions of democracy and judicial restraint. Moreover, it is debatable whether they have, in exercising their discretion, brought much rationality and coherence to the law or simply injected uncertainty and disharmony instead. At this point it appears that the pattern will persist. Thus, it seems inevitable that American sales law will continue to diverge, not only across jurisdictions but further and further away from the rickety framework of Article 2. American sales law therefore will not only continue to devolve into something more akin to the common law, it will remain an area of disjunction in which the federal courts play the dominant role in developing the law, even though the law is still formally within the authority of the states.